A Closer Look at the Relationship Between Internationalization and CSR Disclosure Quality

Abstract

Drawing on institutional theory, we investigate the effect of international diversification strategies of multinational corporations (MNCs) on CSR disclosure quality, the extent to which CSR reports reflect MNCs’ CSR activities. We propose that as international diversification increases institutional complexity, they respond differently to this complexity by lowering disclosure quality of environmental CSR yet improving disclosure quality of employee CSR. In addition, since decoupling CSR reporting from actual practices is risky, we examine how the cultural value of uncertainty avoidance in MNCs’ home country changes MNCs’ decoupling response to increasing complexity due to international diversification. Based on a sample of 335 global MNEs from 31 countries, we found general support for our hypotheses.